Economics - Study Mode

[#296] An indifference curve slopes down towards right since more of one commodity and less of another result in
Correct Answer

(A) Same satisfaction

Explanation

Solution: An indifference curve slopes down towards right since more of one commodity and less of another result in Same satisfaction.

[#297] In the context of oligopoly, the kinked demand curve hypothesis is designed to explain
Correct Answer

(B) Price rigidity

Explanation

Solution: In the context of oligopoly, the kinked demand curve hypothesis is designed to explain Price rigidity. The curve is more elastic above the kink and less elastic below it. This means that the response to a price increase is less than the response to a price decrease.

[#298] Profit is maximum when
Correct Answer

(A) TC and TR curves are parallel
(E) Distance between TR and TC is maximum
(J) Slope of TC and TR is the same

Explanation

Solution: Profit is maximum when TC and TR curves are parallel. Profit becomes maximum irrespective of the market situation, when the difference between total revenue (TR) and total cost (TC) becomes the greatest.

[#299] Supply curve will shift when
Correct Answer

(D) Technology changes

Explanation

Solution: Supply curve will shift when Technology changes. Factors that can shift a supply curve either to the left or the right are changes in input prices, number of sellers, technology, social concerns and expectations.

[#300] The Revealed Preference Theory deduces the inverse price-quantity relationship from
Correct Answer

(C) Observed behavior of the consumer

Explanation

Solution: The Revealed Preference Theory deduces the inverse price-quantity relationship from observed behavior of the consumer. Revealed preference theory asserts that the best way to measure consumer preferences is to observe their purchasing behavior.